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In a move that drew praise from the nations health IT czar Monday, Blue Cross Blue Shield of Massachusetts has promised $50 million to implement electronic health records so data can be shared among nursing homes, hospitals and outpatient clinics in three communities in the state.

The pledge is one of the largest investments, if not the single largest, by an insurance company in health information technology. Its also a significant fraction of the $139 million in federal funds earmarked for health IT.

EHRs (electronic health records) are widely believed to improve the quality and cost-effectiveness of health care, but adoption has been slow largely because doctors find them cumbersome to pay for and install.

In addition, EHRs from hospitals, clinical laboratories or outpatient doctors usually cannot be shared electronically among institutions. This means doctors lack important information and may order visits and services that would otherwise be unnecessary.

The Massachusetts project aims to find the best ways for health care providers to shift from paper records to electronic records that can share information across patients and health care sites.

Though funded by BCBSMA (Blue Cross Blue Shield of Massachusetts), the project is managed by a group of 34 health care entities called the Massachusetts E-Health Collaborative, which last week selected three communities out of the 35 that applied to receive the funds. Over the next three years, Greater Brockton, Greater Newburyport and Northern Berkshire will be pilot sites for implementing electronic health records across a community.

In an exclusive interview with Ziff Davis Internet, national health IT coordinator David Brailer—colloquially known as the "health IT czar"—welcomed the move.

"The regional initiatives like this are really designed to succeed; its a peer-driven, culture-changing process," Brailer said. "Its a different animal than just giving a doctor an EHR."

Last year, Wellpoint Inc., a large health benefits company and an independent licensee of the Blue Cross and Blue Shield Association, offered member physicians more than $40 million in free hardware and software. But it found that only about a tenth of doctors would accept an e-prescribing PDA.

John Fallon, chief physician executive at BCBSMA, said funding the project has had unintended positive consequences because so many communities came together to discuss regional health IT. He said in some cases, competing institutions worked together to submit a joint proposal. The number of applicants for funding was nearly four times that expected, he said.

Fallon said BCBSMA put up the funds because it wanted to transform health care and improve quality and safety, but he also cited a need to know how much savings accumulate and who reaps the benefits of more efficient care. "We dont know what the business argument is, because no one has actually done a true business plan for this kind of investment."